GM plans to double car production in China
By Gong Zhengzheng (China Daily)
Updated: 2004-06-08 08:55

Leading global automaker General Motors (GM) yesterday unveiled plans to more than double its production capacity in China over the next three years.

GM said it will invest more than US$3 billion in its China-based joint ventures, with the cash mainly coming from profits generated by these ventures, lifting its total investment in China to US$5 billion.

Phil Murtaugh, head of GM's China operation, said the investment will include new production capacity, research and development facilities, new products and auto financing business.

Murtaugh said this will increase GM's annual production capacity to nearly 1.3 million vehicles by 2007 from the current 530,000 units.

GM presently operates five vehicle and engineering joint ventures in eastern, northeastern and southwestern China with the Shanghai Automotive Industry Corp (SAIC) and Wuling Motor.

The Detroit-based automaker plans to introduce almost 20 new Buick, Chevrolet, Cadillac and Saab models to China within the next two to three years, with the majority of these being produced at the Chinese joint ventures.

GM is "in final stage of preparation" for car financing business in China by creating a joint venture with SAIC, according to Murtaugh.

"The new investment follows our principle of aggressively pursuing growth opportunities while operating within the parameters of the policies set forth by the Chinese Government, because a vibrant market and economic environment really are in the best interests of all of us," Murtaugh said.

China last week launched its long-awaited new policy for the automotive industry.

"The new investment will enable GM to maintain our leadership in China by growing with the market," he added.

GM is only second to Germany's Volkswagen in China in terms of sales.

GM sold 178,256 vehicles in China during the first four months of this year, a year-on-year rise of 55.37 per cent.

Volkswagen, which runs two joint ventures with SAIC and fellow Chinese auto giant the First Automotive Works Corp, also plans to add an investment of 6 billion euros (US$7.3 billion) in China to double its annual capacity to 1.6 million units by 2007.

GM's new investment plan comes amid concerns about vehicle manufacturing overcapacity in China as almost all of world's auto giants are building new facilities to cash in on the booming car market.

"Overcapacity will lead to very acute competition between manufacturers in China, with the less competitive players being phased out in the future," said Zhang Xin, an auto analyst with Guotai & Jun'an Securities Co.

"The market will likely be controlled by a small number of giants, such as GM, Volkswagen and Toyota," said Zhang.

Almost all of the world's auto giants have build one or more joint ventures in China.

China's total annual auto making capacity will reach almost 15 million units by 2007, much higher than the annual demand of around 7 million units which is expected by then, according to the National Development and Reform Commission, one of Chinese auto industry's major watchdogs.

GM will bring the Cadillac CTS, SRX and XLR as both imports and locally assembled products from Shanghai GM, its flagship joint venture with SAIC, into the China market.

Leading global automaker General Motors (GM) yesterday unveiled plans to more than double its production capacity in China over the next three years.

GM said it will invest more than US$3 billion in its China-based joint ventures, with the cash mainly coming from profits generated by these ventures, lifting its total investment in China to US$5 billion.

Phil Murtaugh, head of GM's China operation, said the investment will include new production capacity, research and development facilities, new products and auto financing business.

Murtaugh said this will increase GM's annual production capacity to nearly 1.3 million vehicles by 2007 from the current 530,000 units.

GM presently operates five vehicle and engineering joint ventures in eastern, northeastern and southwestern China with the Shanghai Automotive Industry Corp (SAIC) and Wuling Motor.

The Detroit-based automaker plans to introduce almost 20 new Buick, Chevrolet, Cadillac and Saab models to China within the next two to three years, with the majority of these being produced at the Chinese joint ventures.

GM is "in final stage of preparation" for car financing business in China by creating a joint venture with SAIC, according to Murtaugh.

"The new investment follows our principle of aggressively pursuing growth opportunities while operating within the parameters of the policies set forth by the Chinese Government, because a vibrant market and economic environment really are in the best interests of all of us," Murtaugh said.

China last week launched its long-awaited new policy for the automotive industry.

"The new investment will enable GM to maintain our leadership in China by growing with the market," he added.

GM is only second to Germany's Volkswagen in China in terms of sales.

GM sold 178,256 vehicles in China during the first four months of this year, a year-on-year rise of 55.37 per cent.

Volkswagen, which runs two joint ventures with SAIC and fellow Chinese auto giant the First Automotive Works Corp, also plans to add an investment of 6 billion euros (US$7.3 billion) in China to double its annual capacity to 1.6 million units by 2007.

GM's new investment plan comes amid concerns about vehicle manufacturing overcapacity in China as almost all of world's auto giants are building new facilities to cash in on the booming car market.

"Overcapacity will lead to very acute competition between manufacturers in China, with the less competitive players being phased out in the future," said Zhang Xin, an auto analyst with Guotai & Jun'an Securities Co.

"The market will likely be controlled by a small number of giants, such as GM, Volkswagen and Toyota," said Zhang.

Almost all of the world's auto giants have build one or more joint ventures in China.

China's total annual auto making capacity will reach almost 15 million units by 2007, much higher than the annual demand of around 7 million units which is expected by then, according to the National Development and Reform Commission, one of Chinese auto industry's major watchdogs.

GM will bring the Cadillac CTS, SRX and XLR as both imports and locally assembled products from Shanghai GM, its flagship joint venture with SAIC, into the China market.

Close